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From Caracas. Mercosur and The Venezuela Elections

The soon-to-close electoral race for the presidency of Venezuela between Venezuelan President Hugo Chávez and Henrique Capriles Radonski will certainly be remembered as one of the most fascinating campaign periods in this country’s recent political history.

On one hand, the race has been silently colored by the uncertainty that surrounds Chávez’ health. On the other, it has been marked by a series of unpredictable events that have intensified a complex and divisive political climate.

But in the midst of this bitterly-fought campaign, Chávez scored what should have been a major political victory for his administration: on July 31, he managed to secure Venezuela’s formal admission to Mercosur, the largest trading bloc in South America. Venezuela has already sent its first "Mercosur shipment" to Uruguay, but the bulk of future commerce will follow a set of rules that are currently being negotiated.

Despite its potential importance for Venezuela’s economic future, the electoral impact of Venezuela’s admission to Mercosur was surprisingly insignificant. The news was splashed across headlines and became the topic of opinion pieces and conversations. But Venezuela’s formal admission to Mercosur did not tangibly represent a major boost for Chávez’ candidacy. Why might this have been the case?

It is possible that the events surrounding Venezuela’s adherence to the bloc tarnished what otherwise might have been a more solid political victory for President Chávez. Venezuela’s admission to Mercosur was made possible due to Paraguay’s suspension from the bloc in the aftermath of President Fernando Lugo’s abrupt and controversial ouster from office. Perhaps these unorthodox proceedings diminished the impact of Chávez’ diplomatic victory.

Tarnished or not, the message that the member states of Mercosur delivered to the world in facilitating Venezuela’s entry to the bloc was one of unequivocal support for the Chávez administration and for Chávez himself, who was already seeking a third consecutive term in office.

The message sent by Brazil, Argentina and Uruguay resounded in Venezuela. At home, it was clear that Chávez’ sustained diplomatic efforts to build alliances with leftist regimes in the region afforded his administration a substantial victory that had been more than six years in the making, ever since Venezuela began the formal adherence procedure in 2006.

The regional show of support for Chávez, however, did not tangibly propel his candidacy forward—in part because the presidential race has tightly hinged on issues that affect Venezuela domestically.

The primary election issue is the alarming level of violence and criminality that defines daily life in Venezuelan cities. Venezuela’s homicide rate makes the country one of the most dangerous nations on the planet. Food and energy shortages are another topic on the agenda, as are the galloping rates of inflation and the deteriorated status of Venezuela’s productive apparatus. Throughout the campaign, these critical issues have taken priority over Chávez’ accomplishments regarding regional integration.

But perhaps the most significant reason why Venezuela’s entry to Mercosur did not play a greater role in this year’s race for the presidency is because, a scarce two months since the country’s admission, it is still unclear whether Venezuela’s membership to the bloc will be beneficial for the country’s economy. Economists on opposing sides of the political spectrum in Venezuela agree on this point.

Although Mercosur offers the country a range of opportunities for growth and development, it also exposes it to serious economic challenges. The business sector worries, for example, that local firms and industries will not be competitive domestically once commercial trade with Mercosur is fully liberalized. In light of this, entities like the national chamber of automakers have issued requests to the government, asking that their sectors be excluded from Mercosur-related trade.

Local economists warn that in entering Mercosur, Venezuela cannot simply become an avid consumer of cheap imported goods from its neighbors. To benefit from its new status and participate in foreign markets, it must promote domestic production.

Before Venezuela completes its adherence to the bloc, it must adopt a series of measures dictated by the bloc and participate in rounds of negotiations with other members in which it will have the chance to make use of the safeguard mechanisms Mercosur grants to its member countries. Among these safeguards is a “list of sensitive products” that every member can present to the governing bodies of the trading bloc. This list determines which commercial rubrics in Venezuela will enjoy temporary trade protection for the next five, six, up to ten years. The list must be ready for submission by early 2013.

No matter which candidate wins the October 7 elections, Venezuela will have to design a strategy regarding Mercosur that allows the country to fully benefit from its member status. Its success in doing this and in negotiating with local industries as well as with other Mercosur members will determine the legacy of Chávez’ drive to join the region’s trading bloc.

Juan Víctor Fajardo is a guest blogger for AQ Online and Venezuelan freelance journalist and photographer based out of Caracas. He is currently working as a consultant on Mercosur. His Twitter account is @juanvictorfg

Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.